Brown v U105 Ltd [2011] NIIT 00410_11IT (29 September September 2011)

THE INDUSTRIAL TRIBUNALS

CASE REF: 410/11

CLAIMANT: Sean Brown

RESPONDENT: U105 Ltd

DECISION

The unanimous decision of the tribunal is as follows; the complaints of breach of contract and of the right to receive an itemised pay statement had been withdrawn and dismissed before the hearing. The complaints of unlawful discrimination on grounds of age, gender and race were withdrawn by the claimant on the second day of the hearing and were therefore dismissed in an oral decision at that point. The complaint of unfair dismissal succeeds and compensation of £4,610.29 calculated as set out in this decision is awarded to the claimant in respect of unfair dismissal. A further sum of £760.00 is awarded in respect of the failure to provide written particulars of employment. The total award is therefore £5,370.29. The attention of the parties is drawn to the Recoupment Notice attached to the decision.

Constitution of Tribunal:

Vice President: Mr N Kelly

Members: Mr B Collins

Mrs T Madden

Appearances:

The claimant appeared in person and was not represented.

The respondent was represented by Mr B Mulqueen, Barrister-at-Law, instructed by A & L Goodbody, Solicitors.

Issues

1. The claimant cited U105 Ltd as the respondent in his claim form. The response to that claim appears to have been entered on behalf of that limited company and also on behalf of UTV Media PLC. U105 Ltd is a subsidiary company of UTV Media PLC. However, the title of the action has not been amended to include UTV Media PLC as an additional respondent and U105 Ltd remains the only respondent to this claim.

2. Given the withdrawal and subsequent dismissal of the claims of breach of contract, failure to receive an itemised pay statement and unlawful discrimination, the only issues remaining for determination were:-

(i) Had the claimant been a casual employee of the respondent or an independent ‘self-employed’ worker engaged by the respondent? If the claimant had been a casual employee, automatically unfair dismissal was conceded by the respondent on the ground of failure to comply with the statutory dismissal procedure provided for in the Employment (Northern Ireland) Order 2003.

(ii) If the claimant had been a casual employee of the respondent and therefore automatically unfairly dismissed, what was the appropriate compensation?

(iii) If the claimant had been a casual employee of the respondent during the relevant period, ie from the end of June 2009 to 28 October 2010, had the respondent provided written particulars of employment in accordance with Articles 35(1) and 36(1) of the Employment Rights (Northern Ireland) Order 1996 and, if not, what was the appropriate award under Article 27 of the Employment (Northern Ireland) Order 2003?

Hearing

3. The hearing lasted for two days on 22 – 23 August 2011. The witness statement procedure was used and witness statements for each witness had been exchanged in advance of the hearing. Each witness read out their statement and moved then to cross-examination and re-examination. The claimant gave evidence on his own behalf and called no witnesses. Mr Jonathan Carroll, the respondent’s Human Resources Manager, and Mr Peter McVerry, the respondent’s Station Manager, gave evidence on behalf of the respondent. The tribunal panel met on 21 September 2011 to review the evidence and submissions and to reach a decision.

Relevant findings of fact (liability)

4. Between 12 January 2009 and 13 April 2009 (‘the first period’), the claimant was engaged by the respondent on a work experience placement. This was an unpaid position, perhaps best described as an internship, under the Government’s Step to Work Scheme. The claimant received social security benefits during this period and both parties accepted that, during this period, he was neither an employee nor a ‘self-employed’ worker providing services to the respondent.

5. Between 13 April 2009 and 25 June 2009 (‘the second period’), the claimant was offered and accepted work as a Broadcasting Assistant on what was described by both parties as a ‘freelance’ basis. The nature of this relationship was not at any stage reduced to writing and no contemporaneous contractual or similar documentation was prepared by either party during this period. The claimant was paid on a daily rate on the basis of completed timesheets. The daily rate was higher than the equivalent payment made to recognised employees of the respondent doing similar work.

The claimant stated on two occasions during cross-examination that during this period, between April and June 2009, he had not been an employee of the respondent.

6. Between 25 – 26 June 2009 (for ease of reference, ‘the end of June 2009’) and 28 October 2010, (‘the third period’), the claimant was engaged by the respondent on a continuous series of tasks, as either a Broadcasting Assistant or a Content Producer.

7. At the end of June 2009, Mr McVerry, the respondent’s Station Manager, offered the claimant a fixed term contract of employment. That proposed contract, uniquely in this case, was in plain terms in written form. It specified that:-

“Employment with the Company would commence on the 22^nd of June 2009.”

There was no reference in the contract document to earlier or existing ‘employment’. The contract was in standard terms and provided for an annual salary of £15,000.00 to be paid pro rata for the six month period of the fixed term contract.

8. The claimant refused the offer of fixed term employment. He was not prepared to work for a salary of £15,000.00 per annum even though a fixed term contract of employment would have offered him more stability, at least over the six month period covered by the contract.

9. The claimant continued to work for the respondent for a continuous period of approximately 16 months, performing duties which were largely similar to the duties he had performed previously. This was the ‘third period’ described in paragraph 6 above.

10. The claimant argued that his status had changed at about that time to that of employee. The claimant accepted that no one had, on behalf of the respondent, actually told him that this change in status had occurred and there was no documentation supporting this assertion.

11. The respondent argued that his status had been and remained that of a ‘self-employed’ worker or contractor. However, there is no record of the terms ‘self-employed’ or ‘contractor’ ever having been used in correspondence or documentation between the parties. Mr McVerry, the station manager, accepted that he had not himself used the words ‘self-employed’ to describe the claimant’s status in any discussion that he had had with the claimant.

Mr McVerry argued that the claimant had been fully aware of his ‘self-employed’ status throughout the second period, ie the period from 13 April 2009 to 25 June 2009, and thereafter throughout the third period up to 28 October 2010.

12. The claimant’s income tax and national insurance contributions were deducted throughout the respondent’s payroll system during the second and third periods. There was no evidence that the claimant had been asked whether those deductions were acceptable to him as a ‘self-employed’ worker or contractor or that he had been asked whether he would prefer to fill in a self-assessment form for income tax under what used to be Schedule D. The claimant denied that any such suggestion had been made to him at any stage in his ‘engagement’ (to use a neutral term) with the respondent. The respondent stated that it used approximately 71 “freelance” contributors in the wider UTV Group in Belfast. Some two-thirds of those contributors were paid through the payroll system and one-third through invoices with those individuals taking care of their own income tax and national insurance.

13. There was no evidence before the tribunal as to the type of national insurance contribution deducted from the claimant’s earnings, ie whether those contributions had been Class 2 (‘self-employed’) or Class 1 (employed).

The tribunal assumes that if Class 2 contributions had been deducted by the respondent during either or both the second and third periods, the respondent would have produced evidence to that effect before the tribunal. The tribunal will therefore proceed on the basis that the contributions deducted were Class 1 contributions, ie the contributions normally payable by an employee.

14. The respondent did not seek any indemnity from the claimant in relation to the work to be performed, according to its version of events, as a ‘self-employed’ worker or contractor for the respondent. Similarly, the respondent did not enquire as to whether or not the claimant had any form of insurance cover in respect of any damage he might cause, or liability he might incur, during his activities as a ‘self-employed’ worker or contractor.

15. The respondent did not ask the claimant, on a regular basis or indeed at any time during the third period, whether he was available to work for the respondent during the next week or the next month. The respondent assumed his continuing availability.

Relevant law

16. The primary issue in this case is whether the claimant, during the period between the end of June 2009 and 28 October 2010, the ‘third period’, was a casual employee employed by the respondent on a continuous basis, or a ‘self-employed’ worker or contractor engaged by the respondent, again on a continuous basis.

17. The term ‘freelance’, as used by both parties during the relevant period, has no settled or legally defined meaning. Dictionary definitions vary and are of limited assistance. They range between a ‘writer or artist who sells services to different employers without a long-term contract with any of them’, ‘a ‘self-employed’ person’, ‘someone who works independently and on temporary contracts’, and ‘a medieval mercenary’. The latter definition, at least, can be disregarded.

It appears that the terms ‘freelance’ therefore can be understood to mean ‘self-employed’ and may even be frequently understood to mean ‘self-employed’, but it can equally be understood and used to refer to someone who is engaged in a series of separate contracts of employment without a settled employment relationship.

The use of imprecise and ambiguous terminology to describe contractual relationships is not helpful.

18. Determining whether a contractual relationship between a claimant and a respondent is that of an employee and an employer or whether it is that of an independent ‘self-employed’ worker or contractor and a client depends, firstly, on whether three particular factors are present. If one of those factors is not present, the claimant cannot be regarded as an employee. Those factors are:-

“(i) The contract must impose an obligation on a person to provide work personally.

(ii) There must be a mutuality of obligation between the employer and the employee (normally, an obligation on the employee to work and an obligation on the employer to pay for that work).

(iii) The worker must expressly or impliedly agree to be subject to the control of the person for whom he works to a sufficient degree, to make that person master.”

19. If each of those factors is present, it does not necessarily mean that the claimant must be regarded as an employee and the respondent an employer. The tribunal still has to identify the potentially relevant factors which point one way or the other towards either an employment relationship or a relationship of ‘self-employed’ worker or contractor and client, and then to look at the overall picture – Hall (Inspector of Taxes) v Lorimer [1994] ICR 218.

In that case, a vision-mixer who supplied no tools, equipment or money to the business, and did not hire any staff, was still regarded as a ‘self-employed’ contractor rather than an employee. The key factor on the facts of that particular case was that he was a professional person who worked for a variety of people for very short periods and was not dependent on any one paymaster. That is not the situation in the present case.

20. The Court of Appeal stated in that case:-

“There is no single path to determining whether or not the contracts from which a person derives his earnings are contracts of service or contracts for services. An approach which suits the facts and arguments of one case may be unhelpful in another. The court agreed with the views expressed in Mummery J below that it ‘is not a mechanical exercise of running through items on a checklist to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture from the accumulation of detail. The overall effect can only be appreciated by standing back from a detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of evaluation of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of individual weight or importance in any given situation. The details may also vary from one situation to another.”

“The most outstanding feature of the present case was that the respondent customarily worked for 20 or more different companies and the vast majority of his assignments lasted for only a single day. Moreover, he ran the risk of bad debts and incurred very substantial expenditure in the course of obtaining and carrying out his engagements. In the circumstances, it could not be said that the conclusion reached by the Special Commissioner was inconsistent with facts found by him.”

21. As indicated above by the Court of Appeal, the importance of individual factors will vary according to the circumstances of each case and there is no universally applicable checklist of appropriate and relevant factors.

22. Where a contractual relationship has not been reduced to writing, it is legitimate to consider the way in which the claimant and respondent understood the relationship and the way in which they conduct themselves in practice – Carmichael v National Power PLC [1989] ICR 1226.

23. In his closing submissions, Mr Mulqueen referred to the use of the term ‘freelance’ and stated that it was the custom and practice of the industry. He sought to argue that this indicated that it was generally understood by everyone, including the claimant, to mean a ‘self-employed’ contractor. This had not been put to the claimant in cross-examination and equally had not been addressed by the claimant in his cross-examination of the respondent’s witnesses. Mr McVerry in the second paragraph of his witness statement had stated that the respondent retained the service of several freelance contractors and stated:-

“This situation would in my opinion be considered to be an industry norm.”

There was no evidence that the description, ‘self-employed’ or ‘independent contractor’ was ever used by the respondent or the claimant to describe their relationship and no convincing evidence that the claimant understood that, according to the industry norm, he was ‘self-employed’.

This issue is dealt with in the Court of Appeal decision in O’Kelly & Others v Trust House Forte PLC [1983] IRLR 369 where the head note recorded that the tribunal at first instance had found that all parties were fully aware of a custom and practice in the relevant industry to the effect that casual workers were not considered to be employees and that the tribunal had concluded that when parties embarked upon a relationship pursuant to the known custom and practice in industry, it was indicative of their intention not to create an employment relationship. The decision of the tribunal at first instance was restored by the Court of Appeal.

Relevant factors

24. The factors which would appear to be potentially relevant in this case and which would point, viewed in isolation, to the claimant being an employee are as follows:-

(i) Income tax was deducted through the payroll system as with recognised employees.

(ii) Class 1 national insurance contributions were deducted.

(iii) There was an assumption on the part of the respondent that the claimant was available throughout the third period and therefore an assumption there he was not working during normal working hours for other employers.

(iv) The claimant undertook no personal financial risk in carrying out his duties.

(v) The claimant could not increase his profits or earnings by his efforts. He was paid a fixed rate.

(vi) The claimant was subject to timekeeping supervision and to line management.

(vii) The claimant was not asked for either an indemnity or for confirmation of insurance cover.

25. The potentially relevant factors which, viewed individually, would tend to point towards the relationship being that of a ‘self-employed’ contractor and a client were as follows:-

(i) The use of the term ‘freelance’ which can mean and often means ‘self-employed’.

(ii) The claimant could produce no convincing reason why his status would have changed at the end of June 2009 immediately after he had refused an offer of a fixed term contract of employment.

(iii) The claimant stated that he understood that he was not an employee during the first period (The Steps to Work Placement) and much more importantly, during the second period when he had also been described as a ‘freelance’.

(iv) The claimant did not positively assert that he was an employee until very late in the day.

(v) The claimant was paid a higher rate than that paid to mainstream employees. However, that could, as one interpretation, reflect the casual nature of the employment, rather than fixed term or permanent employment.

Decision

26. Turning to the three factors outlined in Paragraph 18 above, it is clear that the claimant satisfied each of those factors. He had to provide the work personally. He could not substitute another worker or a sub-contractor to do the work. There was a clear obligation on the respondent to pay for that work. The work was carried out under the control and line management of the respondent.

27. The position therefore is that the claimant was potentially an employee of the respondent. The final determination of whether that was indeed the case or whether the claimant had been a ‘self-employed’ worker or contractor, depends, firstly, on an identification of the relevant factors which might point one way or the other and then, secondly, on an informed, considered and qualitative appreciation of the whole picture.

28. The claimant did state on two occasions in his cross-examination that he had not been an employee during the second period. However, those statements appear to have reflected his understanding of the legal definition of ‘employment’ and are not necessarily determinative of the issue. The claimant appeared to differentiate between the second and third periods because his engagement in the third period had been continuous. That is not a basis for ruling that the engagement in either period was or was not employment. Casual employment can be either intermittent or continuous, as indeed can engagement as an independent ‘self-employed’ worker or contractor.

29. The nature of a contractual relationship between the respondent and the claimant would not necessarily change and cannot be determined solely because both parties use an imprecise and ambiguous term, ie ‘freelance’, particularly where the words ‘self-employed’, ‘‘self-employed’ contractor’ or ‘casual employee’ appear nowhere in the relevant documentation or in the discussions between the claimant and the respondent’s management.

30. The nature of the work and the line management control relevant to the third period appears to have been indistinguishable from that offered to the claimant in the fixed term employment contract at the end of June 2009.

31. The evidence from Mr McVerry was that the use of freelancers was the norm in the industry. However there was no evidence that there was a general understanding that the freelancers were, of necessity, ‘self-employed’ or independent contractors. The claimant denied that he was ever told that he was ‘self-employed’ or an independent contractor before he raised this issue with the respondent. His application for a permanent post as content producer does not, as argued by the respondent, show that the claimant understood that he was ‘self-employed’. His description of his then role as a freelance broadcast assistant/content producer and his statement that he was interested in a permanent role are equally consistent with casual, albeit continuous, employment.

32. The task for the tribunal is, as in the O’Kelly case (above), to:-

“Consider all aspects of the relationship, no single factor being in itself decisive and each of which may vary in weight and direction, and having given such balance to the factors as seems appropriate, to determine whether the person was carrying on business on his own account.”

33. Standing back from the picture accumulated from all the relevant factors outlined above, the tribunal’s view is that throughout the third period, the claimant was a casual employee. The tribunal has carefully observed the claimant and the respondent’s witnesses giving evidence and has concluded that the nature of the contractual relationship was never fully explained and understood between the parties. The claimant attached great weight to the ‘continuous’ nature of his engagement during the third period. That is relevant to whether the qualifying period of continuous service has been achieved. It is not determinative of the employed/’self-employed’ question. For their part, the respondent’s witnesses, particularly in their references to the claimant’s September 2010 job application, placed great weight on the claimant’s acceptance that his role was not ‘permanent’. Permanency is not determinative of the employee/’self-employed’ question either. As indicated above, casual employment with absolutely no guarantee of permanency, can last for substantial periods. The parties do not appear, at any stage in the third period, to have had any common understanding of the nature of their contractual relationship. This is not the type of situation described in the O’Kelly case, above.

34. The tribunal’s decision is that the factors set out at paragraph 24 outweigh those set out in paragraph 25 and that the claimant, during the third period, was a casual employee. It may have been the case that the claimant had also been an employee during the second period but neither party brought forward sufficient evidence for the tribunal to determine that issue.

He did the same type of work as recognised employees. He was subject to line management. He was paid for his time. He was paid through the payroll system and not by invoice. The option of submitting invoices and dealing with his own income tax and national insurance had not been offered to him. He was not asked or expected to provide his own insurance cover or to indemnify the respondent in respect of third party or public liability claims. He was assumed to be available from week to week and was essentially dependent on one paymaster. At the relevant time, it was not suggested to him that he was ‘self-employed’ and he did not understand that to be the case.

35. For the avoidance of doubt, the decision should make it plain that this claim has been determined on its own facts. This decision does not mean that any other ‘freelance’ would be regarded as an employee or would be more likely to be regarded as an employee. Any such claim would have to be determined on its own facts.

Findings of fact (remedy)

36. The claimant was employed for approximately 17 months before the date on which his employment was terminated. His gross weekly wage was £437.50. His net weekly wage was £303.81.

37. The respondent did not comply with the statutory dismissal procedures set out in the Employment (Northern Ireland) Order 2003. This failure was because of the respondent’s genuine but, in the view of the tribunal, mistaken belief that the claimant was not an employee but was an independent ‘self-employed’ worker or contractor. There was no malice in this decision and there was no deliberate disregard of the statutory procedures on the part of the respondent.

38. The claimant, in the view of the tribunal, did not take adequate measures to mitigate his loss following the termination of his employment. He gave evidence that he had submitted a small number of applications for other mainstream employment. These averaged out at less than one application per month. He ‘glanced’ at the Belfast Telegraph. The claimant did engage in other activities by playing for certain musical bands and one choir in the evening or at wedding functions. This activity brought in relatively little money and would not, in any event, have precluded the claimant from seeking other more regular and gainful employment to mitigate his loss. The claimant did not, as the tribunal would have thought appropriate, compile a CV illustrating the benefits that he had received in terms of experience and training following his Steps to Work placement and subsequent employment with U105 Ltd and then circulate that CV among the various independent and local radio stations operating within Northern Ireland or indeed elsewhere. His explanation was that he had assumed that any vacancies in radio stations or in media organisations would be advertised. Given that many vacancies would be short-term and casual or indeed ‘freelance’, it is difficult to see how the claimant could have legitimately come to this conclusion and to have failed to properly take advantage of the experience and training that he had gained while working with the respondent.

39. On 5 November 2010 Mr McVerry telephoned the claimant and left a message which said that he wanted to check if the claimant was available for some freelance work which may [tribunal’s emphasis] have been available. The claimant asked for a written offer setting out the relevant details. Those details followed and the offer was at least two days work at £65.00 per day gross. The offer was declined.

Decision (remedy)

40. The claimant is entitled to a basic award, subject to the statutory cap on weekly earnings of £380.00.

41. The tribunal has concluded that the claimant could, if he had attempted to do so, have relatively quickly found some form of alternative employment, given the range of his qualifications, which included a PGCE, a degree in music and practical experience in working for a radio station. There was no evidence, as indicated above, of any sustained or real attempt to find alternative employment. The tribunal therefore fixes the period of loss of earnings as 12 weeks from the date of termination.

42. The appropriate figure for a statutory uplift appear, in the circumstances of this case, to be 10%. There was no attempt to flout or disregard the statutory procedures by the respondent. There was a genuine misapprehension on the part of the respondent as to the status of the claimant. A higher statutory uplift would therefore not be appropriate. The claimant’s earnings during the evenings or weekends are not part of the calculation since it would appear that he could have earned those sums even if he had remained in employment:-

Basic award = £ 380.00

Compensatory award

12 weeks x £303.81 = £3,645.72

Less two days work refused at £100.00 total net pay £3,545.72

Plus loss of statutory rights @ £300.00 £3,845.72

Uplifted by 10% £ 384.57

Total £4,610.29

43. Articles 33(1) and 36(1) of the Employment Rights (Northern Ireland) Order 1996 requires an employer to provide an initial statement of particulars of employment and a written statement of any subsequent changes to any of those particulars. Article 27 of the Employment (Northern Ireland) Order 2003 provides that the tribunal shall, where a breach of that duty is established, make a minimum award of two weeks gross pay, subject to the statutory cap (£380.00) or, if in all the circumstances, it considers it just and equitable to do so, four weeks gross pay.

As indicated above, in relation to the statutory dismissal procedure, the tribunal accepts that the respondent genuinely did not regard the claimant as an employee. There was no deliberate disregard of the statutory requirement and no malice in its failure to provide a statement of employment particulars. The tribunal therefore makes a minimum award of two weeks gross pay, subject to the statutory cap, ie £760.00.

44. The attention of the parties is drawn to the Recoupment Notice attached to the decision.

45. This is a relevant decision for the purposes of the Industrial Tribunals (Interest) Order (Northern Ireland) 1990.

Vice President:

Date and place of hearing: 22 – 23 August 2011, Belfast

Date decision recorded in register and issued to parties:

	£
(a) Monetary award	5,370.29
(b) Prescribed element	3,545.72
(c) Period to which (b) relates:	28 October 2010 to 20 January 2011
(d) Excess of (a) over (b)	£1,824.57

Industrial Tribunals Northern Ireland Decisions

Case Ref No: 410/11

CLAIMANT: Sean Brown

RESPONDENT: U105 Ltd

ANNEX TO THE DECISION OF THE TRIBUNAL

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	Industrial Tribunals Northern Ireland Decisions
You are here: BAILII >> Databases >> Industrial Tribunals Northern Ireland Decisions >> Brown v U105 Ltd [2011] NIIT 00410_11IT (29 September September 2011) URL: http://www.bailii.org/nie/cases/NIIT/2011/00410_11IT.html Cite as: [2011] NIIT 00410_11IT, [2011] NIIT 410_11IT